I showed people how to trade stocks using technical analysis for years. These days, as an investment advisor running my own firm, Better Money Decisions, in Albuquerque, New Mexico, I help people -- especially Baby Boomer women and Gen X women - make better money decisions. I find that I enjoy helping, rather than enabling trading addictions. You can also find me at www.bettermoneydecisions.com, www.RealMoney.com, and at www.morningstar.com/advisor. I have an MBA from the Kellogg School at Northwestern University, where I focused on finance and marketing. I’m vegan, and every once in a while I run a 5K. I tweet regularly @katestalter. Would love to hear from you!

A Better ETF for Metals Investors

The most common silver and gold ETFs may present risks unknown to most investors, says asset manager and analyst Mo Dawoud. He suggests some little-known stocks as well as some blue chips for what he predicts will be a challenging 2012.

Mo, you said to me yesterday in an online exchange that you believe that there is really a lot going on with the macro events; they really could be affecting investor’s portfolios in 2012. We certainly did see the macro have a big effect in 2011. What do you believe people need to be aware of going forward?

Mo Dawoud: Well, I believe since the economy has become more globalized the past two decades, whatever happens in the US is affecting Europe, and whatever happens in Europe and the US is affecting China, so people need to have a global outlook on what’s going on in the macro economic picture.

In Europe, there’s a big euro crisis that dominated much of 2011, starting with Greece. Then the domino effect happened in Spain and Italy and Ireland.

People who had a lot of exposure to the European economy took a big hit-especially people that invested in the euro and even the Swiss franc took a big hit because they decided to peg their currency to the euro, which declined their own currency.

For 2011, the people that took a big hit were people who were invested in stock that had too much exposure to what was going on in Europe. To be specific, the financial sector did not do well in 2011, mostly because of, well, what happened in Europe allowed the banks here and overseas had too much exposure to the Euro bonds. For example, MF Global…and also Goldman (GS) and JP Morgan (JPM) had this same problem as well. And so they took a big hit.

Other investors took a big hit in the homeowner sector, such as Toll Brothers (TOL) and Ryland Homes (RYL), because the housing market here is very sluggish, mainly because of high unemployment. That affected people’s portfolios because a lot of them invested in real estate.

Going forward for 2012, I believe we’ll expect more of the same as 2011. In Europe, I believe that it could basically get worse. I believe more bailouts will be coming for Europe. It will be coming from the IMF, the Federal Reserve, and the ECB. I wouldn’t be surprised if there is a bank holiday in Europe, similar to what we had with FDR in the Great Depression, where he called a bank holiday and devalued the dollar.

I wouldn’t be surprised to see that in Europe. That will affect a lot of people’s portfolio, especially people that have a lot of exposure to the euro currency. A great way that people that could hedge against that-I spoke about this many times-is to invest in hard assets; which is actually gold, silver, and oil. Either the stock or the ETF.

For the US economy, going forward in 2012, I believe the biggest concern would be inflation…the same as 2011. We use the Austrian true money supply, which is different from what the government uses to measure their money supply. The Austrian true money supply only counts money that’s available for exchange immediately.

According to the Austrian true money supply, inflation is around double digits…I believe 15%. So anybody who had exposure to the US bond market-and you know the yield is terrible for the US Treasury Bond, around 2%-so if you take the interest rate on some of these ten- to 30-year Treasury bonds and subtract it by the inflation rate, people are getting negative return on their investment.

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